Asia-based investment firm Hillhouse Capital, and San Francisco-based VMG Partners have further expanded their relationship by agreeing to co-invest $100 million in high-potential food and beverage startups.
Headquartered in Beijing, Hillhouse is a global investor with an Asian focus. It a backer of Uber and Airbhb among others, and spans investment rounds from Seed to buyouts. The firm recently broke records, closing Hillhouse Fund IV, it’s fourth Asia-focus fund, oversubscribed at $10.6 billion.
Since its founding in 2005, VMG has made investments in more than 25 food and beverage, personal care, pet food, wellness, beauty, and alcohol brands that have become leaders in their market spaces including, Justin’s, KIND, Pirate’s Booty, SunBum, Spindrift, and Babyganics.
In August, the firm closed its fourth fund – VMG Partners Fund IV – at $550 million, with another $150 million available through a flex-up vehicle, and closed its third fund in the summer of 2015 at $500 million.
“What we’ve learned over the years from fund one to fund four, is that we have a pretty good feel at a pretty early stage of getting to know the brand, whether this is something we want to be a part of,” Wayne Wu, managing director at VMG, told Project Nosh in August.
As an initial move under this latest investment agreement, and as a fourth investment as partners, the two funds have made an undisclosed investment in Little Freddie, a leading European producer of premium organic baby food.
Founded in 2014 by husband and wife, Piers Buck and Taslim Ho, Little Freddie sources its ingredients directly from farms, and has expanded into offering cereals, pouches, and children’s snacks, which are widely available in China through Sam’s Club, and online at T-Mall and JD.com, and in the UK through Boots, and online through Ocado, Amazon, and Tree of Life.
“Little Freddie is a high-quality, trusted brand that has tremendous potential in Asia and other parts of the world, as parents have become increasingly savvy about what they feed their children,” said Cao Wei, Partner at Hillhouse Capital. “We strongly believe that brands able to identify and meet unique and unmet consumer needs will excel in the new and rapidly changing retail landscape.”
The foundation of its success is rooted in the company’s leveraging of big data to gain insight into consumer trends, and its expansion through e-commerce channels. This business strategy aligns well with Hillhouse’s investment mandate, as it strives to identify entrepreneurs that use technology to drive how they engage with their customers, and who are able to have an impact on their industry through differentiated offerings.
For VMG, which is an investor behind iconic brands including KIND, babyganics®, and Quest, this investment in Little Freddie is a good fit with the firm’s investment mission, according to Kara Cissell-Roell, founding partner and managing director of VMG Partners, who said, “We are thrilled to partner with Little Freddie, a brand that resonates so strongly with the mission and vision of VMG, and our experience in the food and mother and child market segments. The company delivers exceptional, organic ingredients, an authentic brand story and an extraordinary growth potential in Asia and beyond.”
Lynda Kiernan